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How National Health Care Reform Will Affect a Variety of States

FOR RELEASE

TuesdayApril 5, 2011

A series of new reports by the RAND Corporation outlines the impact that national health care reform will have on individual states, estimating the increased costs and coverage that are expected in five diverse states once reform is fully implemented in 2016.

In all of the states studied — California, Connecticut, Illinois, Montana and Texas — the proportion of uninsured residents declines significantly under health reform. Government costs will rise in four of the states studied, primarily a function of increased spending on Medicaid.

The state-level reports estimate the impact of the major coverage provisions of the Patient Protection and Affordable Care Act on each of the five states, including estimates of where people will obtain insurance and how it will change state spending. The work was sponsored by The Council of State Governments, a group that helps state leaders share ideas and insights.

"As states move forward preparing for the many provisions of health care reform, it's important for them to have an adequate forecast of what is ahead," said Christine Eibner, co-author of the study and an economist at RAND, a nonprofit research organization.

"We believe this information will help all states to be better prepared to respond to the challenges posed by the Patient Protection and Affordable Care Act," said Chris Whatley, Washington director of The Council of State Governments.

Researchers used a microsimulation model developed by RAND to estimate how health coverage expansion policies affect the number of state residents who obtain or change sources of health of insurance, the types of plans they enroll in, and the changes in private and public sector spending.

The individual state reports are available at www.rand.org. The states analyzed were chosen because they provide a good geographic distribution and include both large and small states.

Findings from the reports include:

Substantial numbers of the non-elderly will choose to buy coverage through insurance exchanges being set up in each state to help individuals purchase health coverage.

In most cases, the majority of new Medicaid enrollees will be newly eligible, but increased enrollment of those previously eligible will cost the states more because the federal government heavily subsidizes newly eligible enrollees.

Total health care spending will increase in four states. Spending will decrease in Connecticut because some low-income individuals previously covered under the state's own insurance plan will now be covered under Medicaid, and the federal government will pay a large portion of their costs.

The estimates are intended to help elected officials and policymakers anticipate the choices that will likely be needed by individuals, employers, insurance companies and governments as various provisions of health reform are implemented.

RAND Health, a division of the RAND Corporation, is the nation's largest independent health policy research program, with a broad research portfolio that focuses on health care costs, quality and public health preparedness, among other topics.

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Senior Economist

Christine Eibner is a senior economist at the RAND Corporation and director of RAND COMPARE, a project that uses economic modeling to predict how individuals and employers will respond to major health care policy changes. She is also a professor at the Pardee RAND Graduate School.

About The Council of State Governments

The Council of State Governments is the nation's only organization serving all three branches of state government, and is a nonpartisan, region-based forum that fosters the exchange of insights and ideas to help state officials shape public policy.

The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest.